Government Operations Committee on Oct. 21st, 2016

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

When you have a problem with shipping, who do you call? Who's your special agent?

[Maureen June Winnicki Lyons]

I don't have one.

I admit that I'm a bit of a hound dog when it comes to tracking. I like to make sure that my customers are receiving their parcels as quickly as they're promised. I will keep on top of my tracking and my delivery schedules with my iPhone and the Canada Post app in case something goes off the rails, as did happen recently with something I had sold to a buyer in Calgary. She'd come back twice within a week to buy more of the same, so I knew she was a satisfied customer, and I wanted to make sure she was getting her orders as quickly as they were promised. One item that was shipped in a smaller box just disappeared after I dropped it off at the post office.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

As someone who buys on the Internet, I'm certainly very familiar with how important tracking is and making sure there's delivery. Would you benefit as a business from having somebody special you could deal with at Canada Post? Do you think that's something—

[Maureen June Winnicki Lyons]

Oh, probably, as long as they weren't overwhelmed by the number of people they needed to serve. Again, I don't pretend that I'm anything other than a really small seller.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

To both of our witnesses, thank you very much for taking time out of your obviously very busy days to be here. You've helped us greatly with your testimonies.

I invite you to submit additional information if you feel it would be a benefit to our committee during our deliberations. If you wish to submit additional information, then you can contact our clerk directly. You can get Caroline's coordinates before you leave for the day. We will be filing a final report with Parliament, probably in the latter part of November. If you do have additional information that you think would benefit us, then I would ask you to do so within about the next 10 days or so.

Once again, thank you so much.

We will suspend for a couple of moments while our next panel comes to the table.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, and to our panellists, our witnesses, thank you for being here.

I believe that most of you, perhaps all of you, were in the room for the first session, so you know how the proceedings work here. We will ask each of you to give a brief opening statement of five minutes or less. Following that, we will engage in a series of questions and answers with all of the committee members.

With no further ado, we'll start. Mr. Bennett, I have you first on my list. You have five minutes, please.

[Glenn Bennett, President, Prairie Region, Local 856, Canadian Union of Postal Workers]

Thank you for the time today.

I'm going to start with the decline in letter volumes. In recent years, Canada Post has been in the media telling Canadians that volumes are dropping. This is being done without full explanation, and it leaves customers believing that Canada Post's whole operation is in decline. CUPW cannot dispute that the letters or cards that individuals send to family and friends are on the decline, replaced by email. However, we can point out that all the other product lines are increasing.

Here in Winnipeg, parcel volumes rose by 30% in 2015, and they are projected to rise by 28% in 2016. There has also been an increase in small packets by 6% to 8% annually, as well as moderate increases in Admail and business mail.

That said, Canada Post evaluates its operation regularly and will conduct volume counts and restructures on individual depots within a city. Locally, the last three depot restructures have increased the number of letter carrier routes, which can only indicate that volumes are on the rise.

With regard to lost revenue, Canada Post continues to focus more on profits than on what its real goal is or should be: to continue providing mail delivery to all Canadians from coast to coast. Canada Post has an opportunity to increase profits by looking at its current operation and ensuring that large-volume mailers are paying their fair share. Some of Canada Post's largest customers are allowed to take their mail to another country, such as the Dominican Republic, place that country's postage on their product, and then return that product to Canada and send it through Canada Post. This is referred to as remailing, and it is a huge source of revenue loss for Canada Post.

Canada Post also discounts postage rates for businesses that are high-volume shippers. These businesses get a 40% to 50% reduced rate from what the rest of Canadians pay. Again, this reduces profits.

Canada Post has focused their business on the popularity of online shopping. A lot of this product comes from Asia, and because of the international postage regulations for third world countries, Canada Post receives little to no revenue for this product. Because of this, major plants across Canada stockpile this product for weeks until they have the resources to work it, causing delays in service.

Finally, the federal government is not charged for mail being sent out, nor are Canadians charged for sending mail to any branch of the federal government. Also, MPs are allowed to send out regular Admail for no cost, which letter carriers deliver at a cost to Canada Post of 2.3 cents per piece.

There are several new initiatives that Canada Post could add to their existing operation that would help it financially. It could supply letter carriers with books of stamps, envelopes, and small packets that could easily be sold at the door. It could have shipping specials for products that fit into a specific size requirement. It could have charging stations for electric vehicles. Door-to-door letter carriers could check in on seniors or people with mobility issues. It could deliver locally produced food. It could offer postal banking. These initiatives and others can be found in the document that I've provided you with today.

In conclusion, with an aging population, Canada Post needs to maintain its door-to-door service and reinstate door-to-door service to those areas already converted to community mailboxes. These community mailboxes have had serious problems with seniors slipping and falling, with thefts, with frozen locks, and with placement in dangerous low-light areas, to name a few.

With Canada Post continuing to be profitable, it has an opportunity to improve on its existing operation by adding services that will not only help financially but also allow them to branch out into new areas, increasing the number of customers using the post office.

Canadians rely on Canada Post to deliver on a daily basis and to maintain the service that customers expect. Businesses of all sizes rely on Canada Post to send their products and to receive payments and goods that keep their businesses going.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Now, Mr. Fisher, I understand that you want the remaining time, which is only about 40 seconds.

[Gord Fisher, National Director, Prairie Region, Canadian Union of Postal Workers]

I want to make the committee aware of something that is referred to by Canada Post as network changes.

Specifically in western Canada, there are six major processing centres. In addition, of course, we have many smaller communities and mid-sized communities. Through the network changes that Canada Post has imposed since approximately 2008, we've seen a deterioration of service in the smaller centres because the practice has been, under the network changes, to ship mail to larger centres, even mail that is destined for that smaller centre.

For example, I know the committee was in Moose Jaw. In Moose Jaw, formerly if you mailed a letter or other items to people within the area of Moose Jaw, it would be sorted in Moose Jaw and most times it would be delivered the next day. Now Canada Post will ship it to Regina. Canada Post has taken that one step further, and now we seen them ship mail over weekends to be processed in places like Winnipeg, for example. Through the network changes, we end up with mail moving across. It makes it more machinable and saves a small amount of money, but it causes a considerable deterioration of service, especially for people and businesses in those mid-sized centres.

[The Chair, Conservative, Tom Lukiwski]

I don't want to cut you off, and it's a valid point. We've certainly heard that in other areas across Canada. We heard that from people in Dryden, Ontario, as an example. They ship mail from there to Thunder Bay and then it comes back, so rather than one-day delivery, it's now four-day delivery.

Mr. Barnett, you're up for five minutes, please.

[Daryl Barnett, Director, Labour Relations, AIL Canada]

Thank you very much.

Members of the committee, thank you for providing American Income Life with the opportunity to comment on the future of Canada Post.

My name is Daryl Barnett. I am the director of Canadian labour relations for American Income Life Insurance Company.

As a Canadian, I personally recognize Canada Post as a valued service throughout all communities of Canada. Canada's post office was created in 1851, 16 years before Confederation, as documented by the Government of Canada's postal service historical overview. The Canadian postal service is part of our social fibre that binds us together as Canadians.

As background, American Income Life Insurance Company, better known as AIL in Canada, is currently licensed in Canada and the United States of America and is registered to carry on business in New Zealand. We currently have more than 7,000 representatives and employees internationally, which includes representatives in Canada. American Income Life, along with its New York subsidiary, National Income Life, services 10.8 million working families and has more than $50.4 billion of life insurance in force.

Our Canadian headquarters happen to be right here in Winnipeg, Manitoba, our public relations headquarters, and we have public relations and provincial general agent offices throughout Canada.

AIL contributes to the economy and community through the payment of taxes and services and by providing insurance to Canadian working families. We are a community-minded organization and are involved in many national, provincial, and local activities. As a company, we are able to provide career opportunities to local residents of Canada.

Since 2010 the Canada Post Corporation and its employees have processed over five million standard pieces of first class mail from AIL to our customers. The number does not include individual Priority post packages, non-standard and oversized packages, or other pieces of mail associated with AIL's business on a normal day.

In 1981, through legislation, Canada Post became a crown corporation and guaranteed basic services to Canadians. This universality is imperative to the type of work and product that we deliver to our Canadian customers. Canada Post and its employees provide a valuable service to AIL and our business plan in Canada.

We support initiatives to strengthen Canada Post and its service to Canadians. We do not support community mailboxes as an alternate delivery method. In our view, this method carries with it decreased security and an impediment to seniors, the poor, and disabled. Obviously, as discussed earlier, weather conditions create a large concern in terms of frozen locks and access to mail.

We continue to support door-to-door delivery as, in our view, this provides a convenient, safe, and universal method of mail delivery. Door-to-door delivery supports our business plan. As research indicates, door-to-door customers were less likely to throw away mail without reading it as compared to customers with a centralized type of delivery system.

At American Income Life Insurance we also support a strong workforce, and we believe we need to protect workers as well as the long-term economic interests of Canadian businesses. This, in our view, is accomplished by businesses supporting policies that create a robust middle class, spur economic growth, and create shared prosperity.

Employees of Canada Post covered by collective agreements provide a secure, well-trained workforce and have the ability to financially contribute to strong communities. The idea of replacing postal workers with retail workers at lower wages does not, in our view, contribute to a strong economy or a strong community.

That being said, we do not support any regression in negotiated benefits, terms, or conditions of postal workers. We support Canada Post as a viable business. Changing how Canada Post delivers mail should, in our view, include changing how Canada Post operates. We believe that the community could utilize Canada Post facilities differently. Rather than having Canada Post move to retailers, look at creating retail and other services through Canada Post.

I thank you very much for your time.

[The Chair, Conservative, Tom Lukiwski]

Thank you for your presentations. We'll now start with our question-and-answer process.

Go ahead, Ms. Shanahan.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you, Chair, and my thanks to the presenters for being here with us this morning.

Just off the top, I'd like to ask each of you kind of a tone-setting question.

The mandate of Canada Post is quite a challenging one, with the universal service obligation as well as the need to be a business on a sustainable basis. In your opinion, should it be service first or business first for Canada Post on a going-forward basis?

[Gord Fisher]

I think that it should be service first. It is a public service. The profits Canada Post is capable of making as a postal enterprise by expanding the services can pay for that. It's been our position for 30 years that profits should be used to improve and increase the service to the Canadian people. I would say service always has to come first in a public-service organization.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much.

Mr. Bennett, I guess you're passing. All right.

Go ahead, Mr. Barnett.

[Daryl Barnett]

For us, service is a very important part of our business plan because of the way we work with our customers and the members of organizations we work with. The service to the customers is paramount. As far as business goes, we would see that going hand in hand with the service. At Canada Post, the business aspect and the service aspect should be working together in ensuring that the service is of paramount concern to us as a company.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much.

Indeed, I'm very interested in the input you have for us, Mr. Barnett, about the business side of being a commercial customer of Canada Post. We heard from the earlier panel about the nuts and bolts of delivery and tracking, and we heard earlier testimony this week about the importance of time-stamping on letter delivery, especially for big mailers. I would think in a business such as life insurance you have very time-sensitive mail that goes out to customers, like the renewal of life insurance policies, and you need to know that people have received those notices.

Can you talk to us about your relationship as a commercial customer of Canada Post? What are the experiences of your business and what could be improved?

[Daryl Barnett]

The experience of our businesses is that we work with multiple customers across the country, which usually have fairly large membership bases, whether they're a non-profit organization or a community organization. When we work with an organization, we set up a process with them of identifying to their members that American Income Life is a product and has a product that their members might be interested in. The way we go about doing business is that we have a two-tier customer system: the first tier is the organization we work with, and the second tier is the actual members of that organization.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

How do you actually use Canada Post in your business?

[Daryl Barnett]

We do direct mailing through the organizations to the members of the organizations.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

You're using Admail or solicitation mail.

[Daryl Barnett]

It's first class mail that goes to individuals.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

What about follow-up once people have policies? What about that kind of mail?

[Daryl Barnett]

Once again, it's first class mail through Canada Post. In some cases, it will be Priority post, depending on what the documents are that are being sent.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

To your knowledge, is your company dealing with somebody, a specialized person, at Canada Post?